Why you should engage contingent workers in Poland

Contents

There are several factors to consider for engaging contingent workers. If you are interested in strategic sourcing and more than just cost, i.e. you want intelligent, ambitious, skilled, multilingual individuals, lower than the average EU wage; look at Poland. We’ll explore many reasons in this article why it’s a very attractive proposition.

Brief recent history

After centuries with no independent state, the Republic of Poland was established in 1919, in the aftermath of the First World War. Nazi occupation took place from 1939 to 1945. Then Germany’s retreat from Poland after the advances of the Soviet Union established a communist satellite state that was known as the Polish People’s Republic in 1952. The fall of communism in 1989 led to the modern Polish Republic that we now know. This, as well as Poland’s acceptance into the European Union in 2004, has led to an ever-growing influx of Western culture and commerce.

Mokotów Field, Warsaw

Economic overview

Poland has the sixth-largest economy in the European Union. The GDP was worth $585.78 billion in 2018 with a growth of 5.1%. It has been growing steadily since Poland was established again as an independent country, setting an EU record. It was the only country in the EU to avoid a recession in the previous decade.

The economy is dominated by a service sector at 62.3%, followed by industry (34.2%) and agriculture (3.5%). The World Bank classified it as a high-income economy, and it ranks 21st globally in terms of its GDP as well as 24th in the 2017 Ease of Doing Business Index.

With a population of just over 38.5 million, the Polish Central Statistics Office in the second quarter of 2019 reported there are 16.5 million ’employed persons’ with 13.1 million ’employees’ and 3 million ‘self-employed’. 7.5 million have a third-level education.

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Ten largest investors in the business service sector

According to a report by the Association of Business Service Leaders (ABSL) in 2017 more than 26% of the world’s BPOs were in Europe, with the leaders – Poland (392), Spain (370), Great Britain (360) and Germany (193).

In the first quarter of 2018, a total of 1,236 BPO, SSC, IT and R&D services centres were operating in Poland. They employed a total of 279,000 people. Of the 831 companies with services centres, 10% were Fortune Global 500 companies in 2017.

Outsourced services in order of popularity

  • IT: Application Lifecycle Management (incl. software development)
  • IT: User support / Service Desk
  • IT: Infrastructure Management / Support
  • IT: Other IT services
  • Finance & Accounting (F&A)
  • BFSI: Financial specific services
  • BFSI: Banking specific services
  • BFSI: Insurance specific services
  • Customer Operations
  • Research & Development
  • HR (incl. Payroll)
  • Supply Chain Management & Logistics
  • Procurement

Salaries

The average annual gross wage in Poland in 2018 was €12,844 (PLN 55,020) compared to €34,254 (£29,588) in the UK and €41,650 ($46,124) in the US.

Wages vary across cities and regions in Poland from €10,264 in the Warmian-Masurian region up to €15,612 in the Masovian region, which includes the city of Warsaw.

Below are some average salaries, according to Michael Page Poland.

Geo-political

Poland is at the heart of Europe, bordering Germany, Czech Republic, Slovakia, Ukraine, Belarus, Lithuania and Russia. It has 16 provinces, known as voivodeships. These are the next level of power below the central government. Their main tasks are to pass local legislation, approve the budget and levy local taxes and fees. Each has its own Marshall who is elected by a majority vote. The voivodeship splits into powiats, which are similar to counties or districts and are a self-governing authority. Powiats are allocated to towns with populations above 100,000 residents. Powiats are then divided into gminas, similar to a municipality. The gmina is also a legal entity and administrative body, run by a mayor and it carries out public tasks. According to the Polish CSO, as of June 2018, there were 380 powiats (including 66 cities with powiat status), and 2,478 gminas.

From national to local level, there is a desire to facilitate foreign direct investment as much as possible, through policy, taxation, infrastructure, property and academia.

Infrastructure

The infrastructure is of a high quality and comparable with any western country. The opportunity to host the Euro 2012 tournament resulted in significant investment in national, regional and local transport.

There is a large network of public transport; modern buses are used in most town and cities and there are a number of national operators. There are also 14 tram systems serving 30 cities including all the locations listed below. A metro also runs in Warsaw. All of the major cities are connected by rail and there are a number of domestic and international routes using varying levels of speed and comfort.

The government, with EU funding, has been investing heavily in the road systems and there are numerous motorway and expressway (or dual-carriageway) routes connecting the country, with many more under construction or at planning stage.

The main airport is the ‘Frederic Chopin’ International Airport in Warsaw. Krakow, Wroclaw, Poznan, Katowice and Gdansk also have international airports and there are 14 in total across the country.

Sea access to Poland is via the Baltic and the three major ports are Gdańsk, Gdynia, Szczecin. The Vistula River is the longest and largest in Poland running practically the length of the country and through major cities such as Grudziadz, Bydgoszcz, Torun, Warsaw and Krakow.

Why Poland at a glance

Poland at a glance

The most popular cities for international business

The cities have been classified into three tiers according to the level of investment by national and international companies and subsequently employment.

Tier 1

Warsaw
Warsaw is the capital of Poland and the largest city. Situated in the voivodeship of Masovia, it has a population of 1.78 million residents with 1.1 million at working age. It’s located on the Vistula River in east-central Poland. In 2012 Warsaw was ranked as the 32nd most liveable city in the world by the Economist Intelligence Unit. In 2017, it came fourth in the “Business-friendly” category and eighth in “Human capital and life-style. The city is a significant location for R&D, BPOs, IT outsourcing, as well as hosting the Polish media industry. Warsaw’s Old Town was listed as a World Heritage Site by UNESCO in 1980

Krakow
Krakow is the second-largest city in Poland, in the voivodeship of Lesser Poland, in the southeast region of Poland, bordering Slovakia. It has a population of over 750,000 with approximately 460,000 at working age. It is one of Poland’s most important economic centres with about 50 large multinational companies in the city. It is a robust technological hub growing in areas such as the internet of things (IoT) and next-gen business software. A popular destination for tourists, it was named European Capital of Culture in 2000, and its Old Town is a UNESCO World Heritage Site.

Wroclaw
Along with Krakow and Warsaw, Wroclaw is considered a Tier 1 city for investment. It’s been called the centre of science and is a significant hub for the pharmaceutical industry. In the voivodeship of Silesia, it borders the Czech Republic and is approximately 270 KM from Krakow, and within 4 hours of Warsaw, Berlin and Prague. With a population of around 640,000 and 385,000 at working age, it is the 4th largest city in Poland. IT, biotechnology, engineering, chemistry and pharmacy are industries represented both by numerous local start-ups and many global players. In 2019 it was placed among Mercer’s top 100 cities in the world for quality of living. In 2016 it became the European Capital of Culture.

Tier 2

Lodz
Lodz is the third-largest city in Poland, with a population of almost 700,000. It is centrally located in the voivodeship of the same name and has a working population of just over 400,000. Its location and road network has evolved the city into a transportation and logistics hub hosting UPS and Arvato amongst others. It would be considered one of the densest locations for BPOs of companies such as Philips, Fujitsu and HP. Local universities such as the University of Lodz, the Technical University of Lodz and the Medical University of Lodz are known for their cooperation with international businesses in the region. The 20+ public and private higher education institutes have been developing language courses for the local BPOs, SSCs and IT companies. Lodz is the location of the world-renowned National Film School and is also a UNESCO City of Film.

Tri-city
As the name suggests, Tri-city is a locality made up of three cities – Gdańsk, Gdynia and Sopot, as well as minor towns in the voivodeship of Pomerania. It’s the most northern region of Poland, with Gdańsk Bay the entrance into the Baltic Sea. The population is approximately 750,000 with around 466,000 at working age. It has more than 100 business service centres and has built a reputation as an IT and R&D hub with Amazon and Intel setting up there. A CBRE report rated Tri-City 8.1 out of 10 as an attractive place to work, including 23 higher education establishments. The beach in Sopot is one of the most famous Polish holiday spots in the summer.

Poznan
Poznan is the capital of the Greater Poland Voivodeship, located west-centrally in Poland. It is the fifth-largest city with a population of just under 540,000 and 325,000 at working age. Its strategic development has focused on BPOs, SSCs and R&D centres and includes companies such as Bridgestone, Carlsberg, GSK, John Deere and Mars. Poznan is known for its science and academia, hosting 130,000 students and the Adam Mickiewicz University is the third-largest in Poland. The standard of living in Poznan is considered high with modern transport systems and rich cultural history. Tourist attractions include the renaissance Old Town and Ostrów Tumski Cathedral.

Katowice
Katowice is a hub of business, science, culture and transportation and has one of the fastest emerging economies, not only in Poland but the whole of Europe. Located in the Silesia Voivodeship, it borders the Czech Republic and Slovakia in the south of Poland. According to the Invest Katowice website, the countries with the most investment in the city are Poland (26%) USA (18%), France (16%) and Germany (14%), including companies such as Fujitsu, Huawei, Accenture, Bombardier, Groupon, IBM, PwC and Unilever. fDi Magazine ranked it first in “Polish Cities of the Future 2019/2020”. The University of Silesia, the Katowice University of Economics and Silesian University of Technology produce some of the most sought-after graduates. The European Economic Congress takes part in Katowice every year. It is a UNESCO City of Music.

Tier 3

Szczecin
Szczecin is the capital of the West Pomeranian Voivodeship in Poland. Located in northwestern Poland, bordering Germany and the Baltic Sea, it is one of the country’s largest ports, looking after one-third of the maritime traffic. It is the site of the University of Szczecin, Pomeranian Medical University, West Pomeranian University of Technology, Maritime University and the Szczecin Art Academy. It also has the National Museum, several theatres and a philharmonic orchestra. In 2016 it was a candidate for European Capital of Culture. Companies such as Arvato, Dansk, Diebold Nixdorf and Genpact are situated here.

Lublin
Lublin City is part of Lublin Voivodeship, located to the east of the country, bordering Belarus and Ukraine. It is noted for its high standard of living and green spaces. With a population of 340,000 and just over 200,000 at working age, 65,000 are students with 10% from overseas. There are nine higher education institutes. Lublin is an up-and-coming region for FDI, aided by being part of one of the Special Economic Zones offering tax incentives. The city has a strategic cooperation between science and business and ambitions to grow sectors such as IT, biotech, pharma and BPO/SSC. Lublin has a proud cultural heritage.

Bydgoszcz
Bydgoszcz is a city in the Kuyavian-Pomeranian Voivodeship in Northern Poland. While it is an architecturally vibrant city with a range of styles, it has been undergoing a transformation and revitalisation in the past decade to make it more attractive to Foreign Investment. Its primary focus has been on tech and R&D, as well as business service centres. The population is just over 350,000 with 210,000 at working age. There are large IT centres in the city, from Atos and Nokia. While there is more competition for talent in the larger cities, Bydgoszcz has a wealth of engineering, economic and tech talent. There are ten higher education establishments. Bydgoszcz is on the Brda and Vistula rivers and hosts the Bydgoszcz Canal. Combining with the historic architecture, it makes a beautiful setting for a city.

Rzeszow
Rzeszow is the capital of the Podkarpackie Voivodeship in the southeast of Poland, bordering Slovakia and Ukraine. As one of the less developed cities from an FDI perspective, there is a wealth of talent at a lower cost than most of the larger locations highlighted. It also has two special economic zones in the voivodeship offering tax incentives. It has been an attractive area for IT and R&D as well as business service centres with recent investment from Atos and Sii. It’s also home to Nestlé and Deloitte business services. The population is almost 190,000 with 120,000 at working age. Rzeszow wasn’t damaged as much as the larger cities in Poland during the Second World War. Subsequently its Old Town, containing the main market square and many churches and synagogues, is considered among the best-preserved in the country.

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The Jagiellonian University, Krakow

Education

Poland is ranked amongst the top countries in the world for its education. Well-educated Polish economists, engineers, IT specialists and scientists are highly sought-after.

The PISA study for the OECD tests 15-year-old students from all over the world in reading, mathematics and science. Poland was ranked 5th in Europe and 11th in the world in the last study in 2015, ahead of Britain and the United States.

It has a long and distinguished history at third level education with the first university opening in Krakow in 1364. According to the Ministry of Foreign Affairs for Poland, over 400,000 students now graduate from around 500 third level education institutions. They are split between public universities & colleges and private. Poland has been leading the development of the private higher education sector with institutions continuing to grow in numbers and stature.

Mechanics and mechanical engineering were among the 20 most popular fields of study in the 2016-17 academic year. Students from the Czestochowa University of Technology and the Kielce University of Technology took part in the prestigious University Rover Challenge in 2018 to build a Mars rover and finished first and third respectively.

AGH University for Science and Technology in Krakow ranked 25th in a global coding competition in 2016 ran by HackerRank and FastCompany magazine.

Poland is ranked 24th on the Nature Index which profiles research in the natural sciences. The Jagiellonian University (UJ) and the University of Warsaw (UW) are listed in the top academic institutions. Also, the Adam Mickiewicz University in Poznań (AMU) is one of the 200 rising star institutions on the Index. The fields that are key to the development of Polish science include physics, astronomy, nanotechnology and genetics.

Poland’s value-proposition is driven not by scale and low-cost, but by highly-motivated and educated staff, and is a proven first-class hub for multilingual European language support. It ranks 11th out of 80 non-native English speaking countries and ranks first place in CEE.

In 59 Polish cities, at 102 universities and colleges (54 public and 48 private), more than 50 foreign languages can be studied.

Polish graduates typically begin their careers at renowned BPOs, where they can learn from experienced managers and make good use of their language skills. Graduates in Poland can speak up to three languages. Listed below are the languages spoke in business service centres in order of popularity:

1. English 2. Polish 3. German
4. French 5. Italian 6. Swedish
7. Danish 8. Norwegian 9. Hungarian
10. Finnish 11. Arabic 12. Greek
13. Croatian 14. Hebrew 15. Latvian
16. Ukrainian 17. Slovak 18. Turkish
19. Romanian 20. Bulgarian 21. Slovenian
22. Chinese 23. Serbian 24. Estonian
25. Japanese

 

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Tax

The corporate income tax (CIT) in Poland is 19%

Corporate income tax-payers include:

Corporations in formation;

  • Limited liability businesses, joint-stock businesses and other legal enterprises;
  • Tax capital groups;
  • Limited joint-stock partnerships with a registered office or management board in Poland;
  • Companies without legal personality that have their registered office or management board in another state are treated as legal entities. They are subject to taxation on their total income in that state, regardless of where it is earned;
  • Organisational units without legal personality unless they are general partnerships, limited partnerships, civil partnerships and professional partnerships.

In 2018 Poland expanded its tax exemptions for 14 special economic zones (SEZs) to investments in struggling medium-sized towns across Poland. These exemptions will last for a period of 10 to 15 years.

The Polish tax system categorises 12 types of tax, including:

Nine direct taxes:

  • corporate income tax (CIT)
  • personal income tax (PIT)
  • tax on civil law transactions
  • forestry tax
  • real estate tax
  • agricultural tax
  • tax on means of transport
  • inheritance and donations tax
  • tax on dogs

Three indirect taxes:

  • tax on goods and services (VAT)
  • excise duty
  • game tax

The VAT rate is 23%

 

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Doing business in Poland – 5 useful things to know

  1. While the level of English is excellent in Poland, it applies more to the younger, pre-Soviet generation, i.e. those younger than 40 years of age. Also, proficiency is less in rural areas.
  2. Polish people are natural problem solvers; they are not passive when it comes to challenges; they will suggest solutions. However, they aren’t great at small talk, if you say ‘How are you’ they will answer it literally.
  3. Holidays are calculated according to the number of years someone has work experience. It falls into two categories – under ten years (20 days) and over ten years’ experience (26 days). However, third level education is considered. Subsequently, graduates, get six extra vacation days only after two years of employment. However, this only works for regular employment contracts, not b2b or contract of mandate mentioned earlier in the guide. Also, the allocation does not include mandatory public holidays like Easter and Christmas.
  4. Speaking of Easter and Christmas, the Catholic Church, which played an influential role in Poland during the communist regime, still has a significant impact on legislation and social attitudes. For example, retailers are forbidden from opening on Sundays, and it is still considered a day of rest for most businesses. Many of the Catholic holidays are also national holidays.
  5. The notice period starts on the last day of the month that the candidate hands in their written notice – it’s not counted from the actual day the candidate hands in their notice. For example, if a worker’s contract was one month, and they gave in their notice on June 2nd, they would finish at the end of July. Subsequently, everyone hands in their notice at the end of the month.

Article sources: Polish Central Statistics Office, Association of Business Service Leaders, Michael Page Poland and Wikipedia.

Consider CXC

The number of contingent workers in Poland is growing by the month as companies use that model. However, the range of contract workers is creating a complexity like never before. It’s a mixed blessing because the various work arrangements offer agility flexibility and cost savings. However, managing such a contrasting workforce can require a small army to hire, track and pay everyone involved. Traditional workforce practices force companies to operate in talent silos. Those that have adopted an integrated talent solution (where contingent and permanent workers are considered) are better prepared to tackle inherent complexity. At a time of converging labour market forces, workforce complexity is unlikely to go away, but how a company manages it will determine how well it can adapt to the changes ahead.

CXC Global enables companies to achieve a competitive advantage through managing contingent workforce quality, efficiency and risk while reducing costs. If you’d like to find out more about our contingent workforce solutions, fill in the info below, and someone will be in touch right away

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